$ 530 mn WB loan to Coal India cancelled

$ 530 mn WB loan to Coal India cancelled
AGENCIES

WASHINGTON, AUG 14: Having utilised just half of its $ 530 million loan to Coal India Ltd, the World Bank has cancelled the rest of the assistance as the bank-approved plans for rehabilitation and resettlement of people displaced by the company ended in "fiasco," media reports here said.

"We thought we could make a real difference in this project," said Edwin Lim, the bank's Director for India, "but we have been disappointed with the project on a number of fronts." one of the biggest disappointments, he said is they failed to honour their do-no-harm pledge to the people.

From the Indian side, Coal India executives said that the bank's expectations of turning displaced people into skilled operators and successful entrepreneurs in a market economy were unrealistic, the Journal said.

The World Bank loan, said Mahanadi Coalfields chairman SN Sharma, "was very welcome when it came... But if some part of it is not available, we will manage. India will run, World Bank loan or no World Bank loan."

The Journal cited the experience with the Coal India loan as typical of many World Bank loans to Third World countries where, despite the best of intentions and plans go awry.

Sumitomo loan to NTPC: Sumitomo Bank will provide a five billion yen (about Rs 250 crore) loan to National Thermal Power Corporation (NTPC) to help the power utility repay its costly yen loan.

The mandate for the bank was given last month and a final loan agreement with NTPC was likely to be signed by end of September, NTPC officials said today. NTPC had taken a five billion yen loan from the Japanese Export and Import Bank (J-Exim) at an interest rate of about 2.5 per cent over London Inter Bank Offered Rate (LIBOR) for funding its various power projects including the Ramagundam Thermal Power Station, the officials said.

The loan from Sumitomo bank would be at an interest rate of about 1.4 per cent to 1.5 per cent over LIBOR and this would help NTPC save about Rs 6 crore, they said. The corporation had earlier also repaid its costly loans through re-financing to save higher interest rates. The deal was arranged by SBI Caps, the officials said.

NTPC, with an existing generation capacity of over 19,000 MW, has set an ambitious target to become a 40,000 MW plus company by the end of 2012 for which it is also negotiating with various financial institutions and commercial banks to arrange credit for the future projects.